8 Big Predictions for Platforms in 2018

Here are our 8 big predictions for platform businesses in 2018.

It's that time of year again. Last year we made 7 predictions for 2017. By our count we went 7 for 7. So with 2018 primed to be a big year for platforms, here are our 8 predictions for platform businesses in 2018.

1. No mainstream blockchain breakthrough, but several more cryptocurrencies explode in value

The Bitcoin and blockchain hype train rolls on. Much like AR and VR a year ago, Bitcoin is getting its moment in the media spotlight This year Bitcoin peaked just shy of $20,000 before cratering back to earth. But it still ended the year up 16x over its value on January 1, 2017, when it just topped $1,000. We aren't predicting where it will end up this time next year - truthfully, nobody knows.

So far, most of Bitcoin's, and the blockchain's value is speculative. Despite a massive influx of investment and speculative cash this year, they still have no proven mainstream applications. Expect that to continue for 2018. While blockchain technology remains promising, there are still a host of challenges left to solve before it's ready for prime time. It's still at least a couple years away.

2. Major tech unicorns start to go public

Last year produced a solid pipeline of tech IPOs, but 2018 should be even bigger. This year should see the first wave of the mega-unicorn platform startups going public.

While Uber is likely still more than a year away - not withstanding its cultural and legal problems, the company still has to figure out a path to profitability - Airbnb and Lyft look like contenders to go public. Other outside contenders include Slack and Pinterest. Airbnb, reportedly already profitable, is our pick for this year, but expect at least two major platform startups to hit public markets in the next twelve months.

3. IoT gains traction with machine manufacturers

The Internet of Things hype cycle has come and gone over the last few years with little to show for it in terms of mainstream success. Yet in the background, investment and enthusiasm has been building for IoT in the industrial sector. Though GE has struggled and failed to achieve its goal of becoming a modern monopoly around the Internet of Things, many other companies have been experimenting successfully.

We expect 2018 to be the year where many of these smaller investments start to pay off. Early platform players will emerge this year in this area.

While it may take a few years for the winners to emerge, the Industrial Internet of Things will start to take practical shape in 2018.

4. Large US platform companies take cues from China and start experimenting with more financial services

In China, Alibaba's spinoff company, Ant Financial, has sparked a revolution in financial services. In a country that has lacked for consumer investment options, Ant and Alibaba rival Tencent have built large financial services platforms on top of their payment platforms.

Platforms in the U.S., both blessed with and challenged a much more robust financial services sector, have looked at their Chinese counterparts with envy. But slowly, this gap has started to narrow. Amazon, for example, has successfully been lending to merchants on its marketplace.

Over the next year, expect to see more of the major platforms experiment with offering financial products. The potential here is massive, and many banks aren't exactly popular with consumers. While progress will be much slower than it was in China, for the major U.S. platforms it's too big to ignore.

5. Walmart continues its success due to Jet.com and its renewed platform approach

One of the biggest platform stories of the last year was Walmart's newfound success. After years of failing in its efforts to combat Amazon, Walmart gained ground. Its acquisition of Jet.com has paid off handsomely as Walmart has begun to win back digital customers and merchants to its marketplace as well as to Jet's.

This stark reversal will continue in 2018, as Walmart truly emerges as the second dominant player behind Amazon for ecommerce marketplaces. As we wrote at the time, Walmart's acquisition of Jet was an expensive price to pay for second place, but it's a move that will prove well worth the investment.

6. Alexa continues to explode, but competition increases

This is the first of our predictions that continue from last year. After multiple failed attempts at building development platforms, we predicted that Alexa would be a big success. And in 2017, it was. Over the last year, Alexa has gone from a voice service on a handful of niche devices to a platform present on a growing number of hardware devices - many of them not made by Amazon - and supported by a large developer ecosystem.

Alexa's success will continue in 2018, as it has become a centerpiece of Amazon's future growth. However, given the promise of voice as a new interface, all the major platforms will continue to pour investment into their own voice development platforms. So far Google is the largest competitor, but expect to see more in 2018 from Facebook, Microsoft and others, such as Baidu in China. For now, Alexa remains the dominant number one in voice, but by the end of the year we expect a clear challenger to emerge.

7. Modern monopolies face more political scrutiny

This was another of our predictions from last year - that platforms would become hot-button political topics. And boy did they ever. From fake news to Uber's legal troubles, Google's antitrust case in the EU, and the occasional presidential rant about Amazon, platforms were never far from the media and political spotlight.

And this issue isn't going anywhere soon. Given platforms growing economic dominance, the unresolved challenge of how they should be handled politically will gather more attention this year. So far, these discussions have resulted in a lot of opinion pieces but little actual legislation. In 2018, that will likely start to change, as governments grapple with the economic and political implications of the growth of modern monopolies.

8. More linear players engage in platform innovation by either building or buying

Last year we predicted that more linear enterprises would look at platform startups as big acquisition targets. And 2017 saw a host of major platform acquisitions, including IKEA buying Taskrabbit, Caterpillar acquiring Yard Club and Wyndham Hotels buying Love Home Swap. Verizon also finally bought Yahoo, which includes platforms like Tumblr. Other enterprises have taken a build approach, such as Klockner, a German metals company that announced at its recent Capital Markets Day its plans to launch a marketplace in 2018.

In 2018, we will see this trend continue in a big way, as more large enterprises come under pressure from platform businesses. Those who don't launch platforms, like Grainger in 2017, will continue to struggle. While those that embrace platform innovation like Walmart will see much greater success.

All in all, 2018 will be a major year for platform businesses. Check this space for the latest major platform news!

Published on: Jan 7, 2018

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.